WWM - Analytics

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    Today’s Trading Edge: AUD/NZD – Kiwi crumbles after RBNZ hints at further easing

    WWM_AUDNZD_JAN_27_2016.jpg

    The Australian dollar continues to modestly climb higher against the New Zealand dollar after the Reserve Bank of New Zealand left interest rates unchanged at 2.5%. The kiwi fell against the majority of its trading partners after the central bank hinted that further easing may be need later this year. The prospects of further easing may continue to keep the New Zealand dollar weak in the short-term.

    The AUD/NZD daily chart displays the recent rise above the both the 200- and 100-day SMA(s). If we see consecutive daily closes above this level, we may see price continue to rise towards the 1.1250-1.1400 region. It is around that area that we could see price form a bearish Gartley pattern. Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 141.4% Fibonacci expansion level of the B to C move. If valid, we could see a bearish reversal help bring price back towards the 1.10 region. If we see the bullish move remain in place, major resistance will come from the 2015 high of 1.1610. This major resistance should be difficult to breach.

    For the remainder of the first half of the year, we could see price trade range bound between 1.0650 and 1.14.

    The trade: Buy AUD/NZD at 1.0875 with a stop loss at 1.0775 and a take profit at 1.1175.  The Risk/Reward Ratio is around 1:3


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